Friday, August 17, 2012

Is Demand for Student Housing Driven By Light Rail or Something Else?

There is new student housing development happening in Minneapolis next to the University of Minnesota and near the soon to open light rail line. The StarTribune says the housing demand is because of the light rail. Here is the headline:

Light rail attracts more student housing on the U of M campus

Here is the story:

More new student housing is headed to the University of Minnesota's East Bank campus. OpusDevelopment Corporatio said this morning that The Station on Washington will be a six-story building with 11,200 square feet of retail space on the ground-level and five floors of apartments with 97 units and a total of 156 bedrooms. The company closed on the land this week and plans to start building this week with completion slated for August 2013.

The project is at the corner of Washington Avenue and Walnut Street across from a new rail station and will replace Mercil's Campus Auto Repair.

Rental housing development on and around campus has been more than robust over the past year, with hundreds of new apartments aimed at student renters. Opus, for example,recently completed Stadium Village Flats, which is just down the street from the The Station on Washington and is now fully leased with a CVS pharmacy, Noodles & Co. and Dino's Gyro. Dave Menke, senior vice president and general manager at Opus, said that the goal of the project is to offer convenience of campus-living with easy access to the light rail transit.
Over the past decade very few apartments were built in Minneapolis, so with the housing market still recovering and household growth expected, developers are planning to build thousands of new rental apartments in Minneapolis. Most of that activity is happening in the North Loop, Uptown and Stadium Village/Dinkytown neighborhoods.

In the grand scheme of things my money is on the presence of the University of Minnesota driving demand for student housing rather than light rail transit.

2 comments:

That's a bit of an oversimplification. If the U was the only thing driving the development, then it would have happened on the other side of the river already. What's more likely happening is that the gravity of the University and Downtown as job centers are extended by more accessible and "acceptable" transportation modes. Obviously for most of us buses work just fine, but still in developers minds and some students, the new transit line makes that last "mind" connection.

But this is what we are seeing all around the country. Major employment centers and institutions like Universities cast a gravity shadow on land values around them based on proximity to their activity. Any transportation mode that increases proximity like a rail line also increases the gravity shadow. Development in Charlotte, Denver, Phoenix etc all follow this pattern. You can read and hear more about it here...

So what is happening is that the location of development is affected by a rail station, not the total amount of development. Demand for student housing is still not driven by the presence of light rail. Just as in TODs around the country, the location of some development is affected rather than creation of new development that would otherwise occur somewhere in the region. What happens is because of consumer preferences and changes to accessibility new transport (roads, rail, cycle facilities, walkability, etc.) redistribute activities rather than generate new activities (assuming that the area has sufficient high quality choices already, which the U of M does). This has implications for finance (why should there be any state or federal subsidy to redistribute activity that would otherwise occur in the region?), and it is not at all clear that transit investment that is the key to promoting these developments. In the case of the University of Minnesota, students will not take the train to go to campus as they are already right next to campus. The examples of Charlotte,Denver, Phoenix, etc. are all examples of the same phenomena. Rail investment is a really expensive way to achieve the results you describe, and in many (if not most) of these cases the effect on development could have been achieved by focusing on aspects of design (walkability, employment and retail mix) without the rail investment as buses would do just fine. If a couple of developers have a technological fetish for rail we are better off educating them than spending billions on new systems. In any event, the claim I disputed was the "demand for student housing" was driven by rail. You can build as many rail stations as you want but without a school there will not be any demand. Rail isn't magic.

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About Me

David King is an Assistant Professor of Urban Planning.His research explores the impact of local
transportation planning on the built environment, public finance, social equity
and accessibility.As part of this
research he has written about the phenomenon of cruising for parking and used
spatial regression techniques to analyze travel behavior.He also studies how public policy influences
the adoption of new technologies to address congestion, energy and
environmental concerns.These issues are
the focus of Professor King’s teaching through his courses covering planning
techniques and methods, transportation and land use planning and transport
policy.